A particular issue of stock carries a stated dividend rate of 8 percent; that if this dividend is not paid during a particular year,it will be paid in a subsequent year before common stock dividends are paid; and that upon liquidation of the corporation,the owner will receive $300 per share before the common stockholders get anything.This stock is:

Question

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The stock has a stated dividend rate of 8 percent, which makes it a preferred stock. The fact that the dividend will be paid in a subsequent year if not paid in the current year indicates that it is a cumulative preferred stock. The provision of receiving $300 per share before the common stockholders suggest that it has a liquidation preference. Therefore, the correct answer is C - cumulative preferred stock with a liquidation preference.

A Particular Issue of Stock Carries a Stated Dividend Rate